A measure of South African manufacturing confidence has fallen to its lowest level since the harshest months of the coronavirus lockdown in 2020, as demand and activity deteriorated sharply.
Absa Group's Purchasing Managers' Index compiled by the Bureau of Economic Research fell to 43.6 in January from 50.9 the previous month, the Johannesburg-based lender said in an email on Thursday. This is the lowest level since May 2020 and below the median estimate of 50 of three economists polled by Bloomberg, indicating a contraction in an industry that accounts for about 15% of South Africa's gross domestic product.
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“Apart from the global financial crisis of 2008-2009 and the pandemic lockdown period of 2020, the index has fallen to such a low level only a few times,” the financial institution said, adding that the domestic manufacturing sector has had a rough start to the year. He said this reflects the fact that it was very low. Said.
The main factors behind the decline in the index were corporate activity, new orders, and inventory sub-indexes.
The drop in business activity was the lowest level since July 2021, when the economy experienced civil unrest that cost R50 billion (about $2.7 billion), but January saw fewer power outages than in most regions. This was despite the fact that there were few. 2023, the lender said. The company said the sharp decline was likely due to a decline in new orders due to a “sharp decline in demand” and a “lack of materials and goods needed for production.”
The International Monetary Fund has almost halved its economic growth forecast for South Africa this year, warning that logistical challenges are constraining activity and holding back the southern African region.
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Still, respondents expressed more optimism about future business conditions. The index, which tracks expected business conditions six months from now, rose to 58.7 from 57.9 in December, with respondents expecting conditions to be better than the current dire environment, rather than better compared to “normal” or long-term economic conditions. also suggests that they expect the situation to improve.
© 2024 Bloomberg
